If you are having trouble paying your bills or have recently had a drop in income, you may want to consider filing for bankruptcy.If you want to file for bankruptcy, you need to prepare your finances and decide if it's the right thing to do.If you decide to proceed with a bankruptcy case, you will need to have certain information ready.
Step 1: You need to get your taxes in order.
It is an annual requirement to file federal and state taxes.If you have let it go for a few years, this could be an indication that you are having financial difficulty.You need to make sure you file your federal and state income tax returns.You can file tax returns at any time, even if your due date is April 15.Obtain copies of tax return forms from the IRS website.For the current year or any prior year, you can find the forms under the "Forms and Pubs" tab.You don't need to print the tax form for a specific year.At the top of the page, just write in the tax year you are submitting, and you can use the most current form.If you need back copies of W-2 or other earning statements, you will need to contact your employers.They should have copies of those documents.The response will take some time if you are clear about what years you need.
Step 2: Check your credit reports.
You may think you know what you owe, but the credit reports have your history.If there is a discrepancy in a credit report, you need to resolve it.You should get copies of your credit reports and review them if you decide to file for bankruptcy.There are three credit reporting companies in the country.You can get official copies of the reports online according to the Federal Trade Commission.You can request the reports by phone.You need your name, address, social security number and date of birth to make a request.You can save the copies of the credit reports.If you decide to file bankruptcy, you will need the information contained in them.
Step 3: List your debts and assets.
You may feel as though you are behind in payments, but you need to organize the facts before you can make a decision.There are two lists of assets.Your regular income should be in one list.This is not money that you have on hand, but should be your income, your spouse's income and any other payments you receive on a regular basis.Valuable property should be on the second asset list.You don't need to list every pair of socks.List your house, car, cash in the bank and any other significant personal items.There are two lists of debts.One list should include your recurring obligations, such as mortgage or rent payment, reasonable estimates for food, utilities, clothing, car maintenance, and so on.The second list should include any outstanding debts that you owe, like past due credit card bills, loans to family members or friends, and even parking tickets.
Step 4: To determine your financial situation, compare your assets and debts.
The state of insolvency is when your debts exceed the fair market value of your assets.For this purpose, compare your list of property with your outstanding debts.The legal definition of insolvency is if the list of debts is greater than the assets.If you are near the end of paying off your mortgage, your house may be worth $300,000, but you have only $50,000 left.You have an asset of $250,000, but you don't have cash.If your bills exceed your ability to pay, you may need to reorganize your finances.It's better to use a second mortgage to pay off other debts than to file for bankruptcy.You're not going to get a blank slate just because you file for bankruptcy.You need to know which debts will be released and which will not.
Step 5: Get the past two years' tax returns.
If you have them on file, that's great.You don't need to make copies of them.You can get copies of tax returns from the IRS if you need to.For the purpose of a bankruptcy filing, you can use a transcript from your tax return.It is possible to get a copy of the return, but it is more expensive and takes more time.You can get a free transcript of your tax return by using the IRS online service.You'll need your social security number, birth date, filing status and mailing address from your most recent return.You need a credit card number or account number to get a loan or line of credit.You need to have a cell phone in your name.In minutes, you can access the online service and print the transcripts of your tax returns.To get one or more transcripts by mail, you need your social security number, date of birth, and address at the time of your last tax filing.The information can be submitted online at https://www.irs.gov/individuals/get-transcript.Within a few days, your transcripts will be in the mail.
Step 6: You can get a mortgage statement.
You will need a copy of your latest mortgage statement, along with information about your interest rate and monthly payments, to support your report on your bankruptcy petition.This information can be used to prepare a couple different forms.You can get a report from the bank or lending agency that owns your loan if you don't have a recent mortgage statement.You can request a statement of your mortgage by telephone.They can mail you one.You don't have to say anything about it.No reason is required for you to get a copy of your report.
Step 7: You can get copies of statements for other loans.
Try to get the most recent report.It would be acceptable if the information is one month behind.Save a copy of the statement when it arrives in the mail.Signing up for a new store credit card is a bad idea if you're going to file for bankruptcy.
Step 8: You can copy original loan documents.
You will need copies of the original loan documents for your mortgage, car loan, and any other loans that you owe in addition to recent payoff information.The language of the loans will need to be reviewed by your attorney to see if you are entitled to any special treatment.
Step 9: All financial matters should be prepared with paperwork.
You will need to be as accurate as possible.You have to have the most recent bills or statements.Bank accounts stocks, bonds, or other investments lawsuits or garnishments filed against you proof of your monthly income, including pay stubs, interest statements, rental/property income and business income are some of the things you should collect.
Step 10: Do you need counseling?
You need to consult with a non-profit credit counseling agency before you can file for bankruptcy.The purpose of this requirement is to help you understand other options besides bankruptcy and to assist you in reviewing your finances to see if you can manage your debts without filing bankruptcy.
Step 11: There is an approved non-profit counseling agency.
The office of the United States Trustee is in charge of many bankruptcies.The U.S. is among other things.A list of approved counseling agencies is maintained by the Trustee's office.You can visit the U.S.To see the list, you have to go to the Trustee's website at http://www.justice.gov/ust/.Many of the approved services can be accessed online or by phone.It is not a requirement that the counseling agency be based in your home state to begin the selection process.
Step 12: Take part in the counseling services.
A counseling session can be done in person, online or by phone.A counseling session usually lasts between one and two hours.You will learn how to evaluate your finances, plan a budget, and discuss options to file a bankruptcy during this session.The agency can charge a nominal fee for its service, but not more than $50.You can ask for a fee waiver at the beginning of the session if you can't afford it.The agency must give the counseling for free if you fit the requirements.
Step 13: Your completion certificate needs to be collected.
You must get a certificate of completion from the agency at the end of your counseling session.You need this certificate to prove that you are eligible to file a bankruptcy.Your petition will not be accepted without it.The counseling agency cannot charge a separate fee for the certificate.
Step 14: Ask your friends for referrals.
Asking acquaintances if they can recommend someone is a good start if you don't know a bankruptcy attorney.
Step 15: You can check websites, local telephone directories and business listings.
Someone who identifies his or her practice as specializing in bankruptcies is a must find.A bankruptcy filing is different from other types of legal practice, so you will want someone with some experience in the field.
Step 16: Ask questions if you meet with potential attorneys.
Meeting with an attorney for the first time is like a job interview.You want to find out if the attorney is the right one for you, and if he or she can help you.An initial meeting or consultation with an attorney is free.Making the most of your time together will require you to be organized.A list of questions to ask should be prepared.Do the attorney recommend Chapter 7, 11 or 13?What other options do you have?How many bankruptcy cases have the attorney handled?Does the attorney represent people who have debts?The attorney might have problems with your case.What is the attorney's charge for your case?
Step 17: Tell the attorney about your finances.
Take with you the paperwork and copies that you have prepared when you go to your initial consultation.The attorney will be able to review it quickly and make sense of your finances if you have it in an organized fashion.
Step 18: You need an attorney to represent you.
You will need an attorney eventually.Recommendations from other people and your own opinion from your initial meeting should be used to base your decision.You have to understand the fee and be able to pay it.When choosing an attorney, consider what you will get for your money.
Step 19: You can choose a chapter.
The term "bankruptcy" applies to several different formats.There are other people who are aware of "Chapter 7."To review the appropriate one for your circumstances, you may wish to consult with a bankruptcy attorney.Chapter 7 is the easiest.Liquidation is what it is referred to as.All or a portion of your debts can be paid off by selling non-exempt property that you own.You are not responsible for any debts that can't be paid.Most people who choose Chapter 7 don't have a lot of non-exempt assets.You have to meet an eligibility means test to file Chapter 7.See the next step for more information.Chapter 11 is reorganization.This type of bankruptcy is usually chosen by businesses.Chapter 11 allows the business to continue operating while it reorganizes.Chapter 12 is limited to corporations that derive most of their income from farming.Chapter 13 is sometimes referred to as a wage earner's bankruptcy.This is for people with regular income who can use some of their income to make a partial payment on their debts.
Step 20: You have to calculate your eligibility for Chapter 7.
If you pass the means test, you can file Chapter 7.Your income is compared to your family size and debts.If your income is high enough, you may have to choose Chapter 13 to pay off some of your debts.The "median income level" test is set by each state.You are eligible to file Chapter 7 if your family income is less than the state median.If your family income exceeds the median income level test in your state, you may still be eligible for Chapter 7.The means test compares your income to your monthly expenses.Chapter 13 can be filed if your disposable income exceeds certain levels.The means test can be conducted with the help of a bankruptcy attorney.You can search online for "bankruptcy means test" and find examples that have been posted by attorneys or financial advisers.
Step 21: Consider the impact on your credit rating.
There is a negative effect on your credit rating when you file for bankruptcy.You have to realize that all the debts have had a negative impact.Paying your debts is the best thing you can do to improve your credit rating.If it is not possible, a bankruptcy filing will have some positive effects.You won't have any outstanding debts after your discharge.You will not be able to file Chapter 7 again for at least seven years, so you will look like a better credit risk.There is no difference between choosing Chapter 7 or Chapter 13 according to the most widely used credit scoring company in the U.S.Chapter 13 can be seen as taking on more responsibility for your debts.
Step 22: You can get a copy of the petition.
If you hire an attorney, you don't need this section because the attorney will handle it.If you decide to file your own bankruptcy, you will need to get a copy of the Petition and Schedules.The forms you need to complete are listed here.You can find the forms by going to the website of uscourts.gov and selecting the link to "Services and Forms" and then "Bankruptcy."
Step 23: Prepare a voluntary petition.
The first paper to initiate a bankruptcy filing is the petition.It is a relatively short form that contains your identification, your selection of bankruptcy chapter, some brief statements designed to verify your insolvency and certifications about your pre-bankruptcy counseling.The form should be completed as accurately as possible.
Step 24: The statement about social security numbers should be prepared.
You can use this form to identify your social security number and any other taxpayer ID numbers you may have used.
Step 25: The schedules should be printed and completed.
The various forms that you need to complete to go along with your bankruptcy petition are referred to as schedules.They are assigned letters from A to J.You should complete the ones that apply to you, because not every case requires every schedule.Property schedule A/B.This form is used to report all the property you own.You claim that the property is exempt.Even if you file for bankruptcy, you can keep certain property for yourself.The property that you can keep is known as Exempt.There is one list in the bankruptcy code.There are laws about exemptions in each state.You have to decide which is more favorable for you.Schedule D is for secured claims.Home mortgages or car loans are examples of secured claims.Unsecured claims are included in the schedule E/F.Unpaid credit card bills and many personal loans are examples of debt that is not secured.Unexpired Leases and Schedule G.Any lease, such as an apartment rental or rent-to-own agreements, should be reported.Schedule H is for co-debtors.Someone who shares an obligation with you is a co-debtor.A husband and wife will most likely sign a mortgage together.Income schedule I.You have to report your regular earnings to the government.Schedule J is your expenses.All regular monthly or other periodic expenses will be reported by you.You should make your best estimate based on a review of your spending habits for the past two or three months.
Step 26: The statement of financial affairs should be prepared.
This is a summary of the information you have provided in the past.All questions need to be answered honestly.
Step 27: You have to pay the filing fee.
It's one of the great ironies of life that you have to pay money in order to declare bankruptcy.You can apply to waive the fee or pay it in installments if you can't afford it.The applications are the same as all the other forms.The fee for filing an individual Chapter 7 bankruptcy case is $335, which includes a $245 filing fee, $75 administrative fee and 15 U.S. dollars.There is a Trustee's surcharge fee.
Step 28: You can file your paperwork at the nearest US Bankruptcy Court.
You have to file a bankruptcy in the district where you live, work or maintain a residence.You can find the nearest court on the internet.Call the clerk's office to find out their hours of operation.This will be less than the full day's hours.You might be able to file by mail.If you choose to do so, send in an extra copy of everything that you are submitting, along with a postage paid return envelope, and ask to have the copies stamped and returned as proof of your filing.